Linda Ensor
30 August 2007
Cape Town — Government's initial response to a proposal that the Southern African Development Community (SADC) adopt a common external tariff was to advise caution, Deputy Trade and Industry Minister Rob Davies said yesterday.
Briefing Parliament's trade and industry committee on the state of SADC negotiations on regional integration, Davies said SA preferred the option of encouraging regional integration by building on the Southern African Customs Union .
However, consultants appointed by the SADC to investigate the issue argued against this option in a report submitted to the recent meeting of the SADC in Lusaka. They proposed the introduction of a common external tariff of 5%-10% on consumer goods. They argued that this would lock SADC countries into a low tariff regime that would integrate the region into the world economy and generate economic growth.
The report will be subject to national negotiations with further discussions taking place when the task team appointed to deal with the issue meets in October.
"We are going to have to debate and discus s it in SA but our initial feelings are that we must be very cautious about it. A customs union is quite a big step. There are not many functioning customs unions in the world," Davies said.
The consultants also recommended that SA should have a revenue structured tariff system, rather than its existing one which is based on industrial policy and trade. Another issue which had to be concluded before the end of the year was the negotiation of an economic partnership agreement between the European Union (EU) and the SADC.
The World Trade Organisation's waiver for African, Caribbean and Pacific countries which signed the Cotonou preferential trade agreement would expire at the end of the year. If there were no economic partnership agreement in place when this happened, these countries would trade on worse terms with the EU, Davies said.
He said there had been some progress at a technical level on the trade of goods in the talks with the EU and he was confident an agreement could be reached by December. The EU has proposed duty free, quota free access for all SADC products except sugar, rice and "competitive products" from SA and is demanding full reciprocity -- which the SADC opposes.
The stumbling block was trade in services and trade- related issues where the EU was demanding commitments.
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